Demand fell and the European chemicals market began to shrink

Anxunsi, a market information service provider in the global energy and chemical industry, recently said that changing market fundamentals are changing the structure of the European chemical industry, with demand falling sharply and consumers lacking willingness to
buy.
After the traditional summer demand off-season, European chemical producers returned to the market to find that inventory levels of downstream producers remained high and demand had weakened
.

Reduced demand

European gas supply security remains threatened, which in turn has pushed up production costs, which, combined with weak demand, has led some chemical producers to choose to reduce production
.

One acrylonitrile buyer in Europe said that "the market is starting to collapse and the only good thing is that we are all sitting in the same boat"
.
This sentiment echoed in the acrylonitrile market, where buyers and producers alike talked about lower operating rates in the fourth quarter
.
Another acrylonitrile buyer said, "We are considering supply next year and have started negotiations
with suppliers.
" It's going to be a tough year for suppliers.
"

Oliver Schwartz, an analyst at the Warburg Institute in Germany, said that "at present, products downstream of the value chain are the most affected, but the impact on products upstream of the value chain cannot be prevented"
.

Production slowed

European olefin producers said they were discussing what they could do in the current market situation and might try to cut production
.

Propylene is strongly impacted
by the current situation.
European producers of propylene downstream derivatives said it was considering closing a European plant
in November and December.
Another European producer of propylene downstream derivatives said, "The operating rate level was lowered in August, but the market still shows no signs of recovery and may have to reduce the operating rate level
further for the rest of the year.
" Record gas and electricity prices have killed the industry, and Europe has seen the first producers of propylene derivatives shut down or insolvency
.
We have struggled with production cuts to most propylene derivatives, resulting in weak propylene demand.
"

The European methanol market faces similar challenges, with high methanol inventory levels in Rotterdam, Europe's methanol trading hub, and a lack of consumer interest in buying that could start to push down methanol prices
.
European methanol traders said that "trading activity in the European methanol market has decreased significantly and if there is little change, the market could weaken further"
.

Dow Chemical announced at the end of August that it would reduce global polyethylene plant operating rates by 15 percent
.
"It's a wake-up call, and expect other companies to follow suit, especially those with operations in Europe,"
Schwartz said.
European methyl methacrylate (MMA) producers said that compared with last year, the demand for MMA in the European market has decreased by 20%~30%.

Phenolic resin producers said that current demand for phenolic resin in Europe has fallen by 15%
year-on-year.

Due to insufficient demand and high costs, some polyethylene terephthalate (PET) plants in Europe have been discontinued
.
Manufacturers are planning to shut down PET plants, but it is doubtful
how many will resume production as planned.
PET industry sources said that due to the weak market, most companies will think twice before completing the overhaul and resuming production
.
Similarly, in the recycled polyethylene terephthalate (R-PET) market, demand is also wavering and the outlook is pessimistic
.

Changes in global trade flows

Global trade flows have changed due to higher production costs and relatively high prices for chemicals in the European chemical industry due to energy shortages, while relatively low production costs and weak demand in Asian markets have led to changes
in global trade flows as producers seek to export to the European market.
In addition, increased chemical exports from Asia have also hindered European producers from maintaining profit margins
.

"Asian producers are well stocked and looking for export markets, initially higher prices in Europe, but a surplus of products has now become a global problem,"
Schwartz said.

European butanediol (BDO) buyers said BDO demand in the European market is also declining, and traders are trying to source BDO from other regions to take advantage of arbitrage opportunities, complementing or completely replacing European products
.
Higher production costs in Europe, especially for gas and electricity, have led to relatively high market prices, while lower production costs and weak demand from Asian producers have opened a window for
arbitrage for Asian exports to the European market.
The European isocyanate and polyol markets are similarly affected
.

Buyers "strike"

The situation in the European chemical market is not going to improve
this winter.
"It's basically the end consumer going on a 'strike' because nobody knows how much money they have left in their pockets other than the necessities,"
Schwartz said.

In the short term, the upward momentum in European gas prices shows no signs of ending, which will continue to have an impact
on the European chemical market.